A Firm That Has Implemented JIT Had the Following Transactions

question 36

Multiple Choice

A firm that has implemented JIT had the following transactions:
1) Materials were purchased on account for $40,000.
2) Materials were placed into production.
3) Actual direct labor costs were $6,000.
4) Actual overhead costs were $40,000.
5) Conversion costs applied were $42,000.
6) All work was completed for the month.
7) All completed work was sold.
8) The variance is recognized.
What will be the entry to record material purchases using the traditional approach?

• A) Materials and In Process Inventory 40,000
• Accounts Payable 40,000
• B) Materials Inventory 40,000
• Accounts Payable 40,000
• C) Accounts Payable 40,000
• Materials and In Process Inventory 40,000
• D) Accounts Payable 40,000
• Materials Inventory 40,000

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Definitions:

Axle Grease

A thick, viscous lubricant applied to the axles of vehicles to reduce friction and wear between moving parts.

Oscillating Bolster

A structural component on rail vehicles or trailers that supports the load and allows for pivoting or oscillation to accommodate uneven terrain.

High Rigidity

A characteristic of materials or structures that resist deformation under load, ensuring stability and durability.

Monocoque

Frame design in which all the shell components form the frame; many automobiles and most van trailers use a monocoque principle. This means that the van floor, roof, bulkhead, doors, and sidewalls collectively compose the frame assembly. Also known as unibody design.